Philippine Telegraph & Telephone Corp. (PTT) was incorporated on November 14, 1962 as a diversified telecommunications entity catering to the corporate, small/medium business and residential segments across the nation.

On June 20, 1964, PTT was granted a 25-year national legislative franchise, Republic Act (RA) No. 4161 for telecommunications activities. An amendment to the franchise was made in 1967 under RA 5048 granting the Company, among others, equal privileges against any competing franchise.

PTT listed on January 10, 1990 for the trading of its common shares but requested voluntary suspension of trading effective December 13, 2004.

PHILIPPINE Telegraph and Telephone Corporation (PT&T) is looking to team up with a Chinese company to provide free wireless broadband services in public areas around the country.

In a disclosure to the stock exchange, PT&T Senior Vice-President and Chief Information Officer Arturo T. Falco said the company has signed a memorandum of agreement (MoA) with Chengdu Zhongxing Tiantong Technology Corp. The MoA will be effective for 90 days.

“The purpose of the agreement is to explore the feasibility of engaging in a project that will provide free wireless broadband services in designated public areas before, during and after the occurrence of disasters in any part of the country,” he said.

PT&T and Chengdu Zhongxing Tiantong Technology will conduct a feasibility study on the project.

“Actual participation of the each party shall be discussed after the conclusion of the said study and will be reflected in the definitive agreement that may be reached by the parties,” Mr. Falco said.

In an interview with BusinessWorld last week, PT&T Chairman Salvador B. Zamora II said the company will tap Chengdu Outwitcom, a wireless communication and networking technology provider and a wholly owned subsidiary of Chengdu Zhongxing Tiantong Technology Co. for the broadband network.

Mr. Zamora said Chengdu Outwitcom was able to roll out Wi-Fi service in the outdoor areas of the Cultural Center of the Philippines (CCP) complex during the 31st Association of Southeast Asian Nations (ASEAN) Summit and meetings last month.

“It was their contribution for ASEAN 50. Their signal was so strong that even the delegates who were inside the ASEAN 50 were using their Wi-Fi. Most delegates ended up using their facilities,” he said, adding the company was able to roll out the service in just one week.

PT&T is also in “preliminary” talks with China Telecom, which Malacañang earlier said the Chinese government picked to enter the Philippine market.

While hopeful of a deal with China Telecom, Mr. Zamora said they will still continue its national broadband network rollout “with or without” the Chinese company.

Malacanang has reported that South Korea’s LG Corp. is interested in striking a joint venture with Philippine Telegraph and Telephone Corp. (PT&T) in a bid to enter the Philippine telecommunications industry.

Presidential Communications Secretary Martin Andanar made the revelation even as China Telecom gears to be the third player in the country, as earlier announced by President Duterte.

Citing his own sources, Andanar said LG is the Korean company that wants to partner with PT&T.

“It will become a very exciting telco industry for the Philippines this 2018,” he told DZBB Radio Friday night.

During a Cabinet meeting last Monday, the Department of Information and Communications Technology (DICT) reported to the President the players who want to enter the telecoms industry.

Following Duterte’s latest pronouncements on China Telecom, the Korean firm expressed interest in challenging the duopoly of Smart Communications and Globe Telecom.

China Telecom, however, has not found a local partner with an existing franchise to comply with the country’s constitutional provision limiting foreign ownership to 40 percent.

As far as the administration is concerned, Andanar said the offer is also open to other countries which want to compete with Smart and Globe.

“Whoever has the best offer in the bidding wins. It’s not a monopoly when it comes to a third player. We really want the best,” he added.

...actually, this article is a good argument to still buy TEL and GLO, especially now that both are down in price

No miracles in sight

Just recently, Philippine Telegraph & Telephone Corp (PT&T) revealed that it is in an advanced stage of partnership discussions with a South Korean telecommunications company.

Last year, PT&T said it was exploring a possible partnership with China Telecom to become the third major telecommunications provider in the Philippines.

While PT&T would not disclose the identity of its prospective foreign partner, a Malacañang official disclosed that it is South Korea’s LG Corp. that the former is in talks with.

Meanwhile, China Telecom, according to news reports, has not found a local partner.

Unless they are able to put their money where their mouth is, all these talk about partnerships and plans to become the third telco in the country mean nothing.

Remember less than three years ago when reports that Australian telco Telstra was in talks with San Miguel Corp. (SMC) to become the third telco. In March of 2016, SMC announced that it had ended the talks because they were unable to come up with commercial arrangements that would have enabled them to proceed. For his part, Telstra CEO Andy Penn said it was obviously crucial that the commercial arrangements achieve the right risk-reward balance for all involved.

The problem with this third telco player talk is that it stems from the assumption that the problem with the local telecommunications industry is the current duopoly of PLDT and Globe Telecom, and that a third telco would be able to solve the problem of high internet costs, slow speeds, and unreliable connection.

Telstra may have realized that even if it was willing to spend $1.4 billion for a 40 percent stake in its joint venture with SMC, that amount was just a drop in the bucket and for many years, the Australian company would probably have to put in more funds to keep the venture going.

Goldman Sachs earlier warned of a potential cash burn for Telstra’s Philippines project, as it estimated that the project could cost both parties $3.5 billion over a three- to four-year period, more than double what Telstra planned to invest.

There was simply no assurance that the venture would make money. Operating a viable telco in the Philippines is simply expensive.

Tong said that a key problem was the lack of mandatory infrastructure sharing, which would force any new player to build their own mobile base stations and backhaul links. This is an expensive proposition considering that the nation is made up of more than 7,000 islands. Building a network across islands and seas is not as simple as building one across contiguous territory.

In the Philippines, telecom companies build or expand that network without any support from the government. Worse, government has made it difficult for them to expand and put up cell sites given the number of permits that need to be secured, not to mention the need to convince the barangay and the homeowners’ association that the residents are not going to get sick from radiation.

Acting Information and Communications Technology Secretary Eliseo Rio himself admitted that the roughly 25 permits needed to build one cell site tower has kept the total number of cell sites in the country at around 20,000 when the country needs at least 67,000.

The Philippines is said to be the only country in the ASEAN region where the government does not provide any infrastructure funding support for the telecommunications sector.

National Telecommunications Commission (NTC) chief Gamaliel Cordoba said at the recent Philippine Telecoms Summit that all other ASEAN countries have telecoms networks that are wholly-owned, partly financed, or operated by their respective governments.

It is only in the Philippines that the broadband networks are constructed, owned and operated by private companies, he emphasized.

In Singapore, Malaysia, Myanmar, Thailand, Cambodia, Indonesia, Vietnam, Laos and Brunei, the major telecom firms are either partly or wholly-owned by the government or are being assisted by their respective governments in term of financing the telco infrastructure and building the national broadband network.

Here, our two major telecommunications company have managed to survive on their own, with little, if any, help from the public sector.

Our telecom firms have spent as much as 30 percent of their revenues on capital expenditure compared to the global average of 16 percent. Those in Singapore and Malaysia are spending less at 15 percent.

The idea of a third telco player is good, but unless government realizes and admits what the fundamental problem is, then we cannot expect any major changes to happen. Especially not in the short to medium term.

THE PHILIPPINE Telegraph and Telephone Corp. (PT&T) on Thursday said it has paid the P7-million fine slapped by the Securities and Exchange Commission (SEC) for its failure to submit audited financial statements and annual reports, among others.

In a disclosure to the stock exchange, PT&T said the SEC Markets and Securities Regulation Department (MSRD) order dated June 5, had imposed a P7-million penalty on the company and indefinitely suspended its registration statement, due to the previous management’s failure to comply with reportorial requirements.

“PT&T is cited and held liable for violating the pertinent provisions of Rules 17, 20 and 68 of the implementing rules and regulations of the Securities Regulation Code, as amended, for PT&T’s failure to (i.) conduct its Annual Stockholder’s Meeting and file (ii.) its Audited Financial Statements and (iii.) Annual Information Statements,” the SEC MRSD said in its order.

The SEC ordered PT&T to submit the following within four months: its 2016 annual report; 1st, 2nd and 3rd quarter reports for 2017; and an affidavit confirming there are no other complaints against the company. The company was also directed to amend and file its registration statement, and immediately conduct an annual stockholders’ meeting.

The SEC said the suspension of PT&T’s registration statement will only be lifted after it has fully complied with the directives under the order.

For its part, PT&T said it has already settled the P7-million penalty.

“The said payment absolves PT&T from all liabilities arising from the deficiencies in its reportorial and compliance requirements committed during the time of the company’s previous management. The settlement of this monetary penalty will allow the company to operate as a going concern under its new management ,” the company said.

At the same time, PT&T said it has also paid a fine of P88,000 to the SEC Corporate Governance and Finance Department for its failure to comply with SEC memorandum circulars that require certain information be made available on the official websites of publicly listed companies.

THE PHILIPPINE Telegraph and Telephone Corp. (PT&T) has appealed to the regional trial court (RTC) of Makati City to be allowed to leave its court-assisted corporate rehabilitation to proceed with its operations.

In a disclosure to the stock exchange late on Tuesday, the telco company said it filed a request to the Makati RTC on Monday to exit rehabilitation, given that it will be subjected to the requirements as outlined in the approved Rehabilitation Plan.

“Part of the compliance is for PT&T to conduct a stockholders’ meeting to increase its authorized capital stock. This will enable PT&T to pay its debts through debt-to-equity conversion as mandated by the approved Rehabilitation Plan,” it said.

PT&T is currently lobbying for its 14-year rehabilitation plan for its P8.8-billion debt at the Supreme Court. The rehabilitation plan was reversed in a decision by the Court of Appeals in May 2017. But in its recent appeal, it said it wants to leave the program.

“The exit from rehab is well within the plan of our new shareholders and another proof point that PT&T is serious in it’s intention to be a major player in the Philippines telecommunications industry,” PT&T president and chief executive officer James G. Velasquez said in a statement on Wednesday.

The telco company, which was once PLDT, Inc.’s biggest rival in the telco industry, has expressed its interest to participate in the government’s search for the so-called “third telco player.”

“PT&T’s exit from receivership enables the company to raise additional capital in the stock market to fund our expansion plans, both in fixed broadband and beyond,” PT&T chief operations officer Miguel Marco A. Bitanga said in the statement.

In March, the company signed an agreement with state-owned National Transmission Corp. (TransCo) to allow for the use of the government’s national fiber optic backbone facility.

THE Philippine Telegraph and Telephone Corp. (PT&T) said a Makati Regional Trial Court (RTC) granted its request to exit from court-assisted corporate rehabilitation, giving a boost to its plan to participate in the bidding for the third telecommunications player.

In a disclosure to the stock exchange, PT&T said the Rehabilitation Court, or Makati RTC Branch 66, has allowed its exit from rehabilitation “subject to compliance with certain requirements in line with the approved rehabilitation plan.”

The company said it is willing to follow its rehabilitation plan, which includes conducting a stockholders’ meeting to increase its authorized capital stock and to pay its debts via debt-to-equity conversion.

PT&T has a case in the Supreme Court concerning its P8.8-billion debt, and is supposed to undergo a 14-year rehabilitation plan.

“The exit from rehab is well within the plan of our new shareholders and another proof point that PT&T is serious in it’s intention to be a major player in the Philippines telecommunications industry,” PT&T president and chief executive officer James G. Velasquez said in a statement last week.

The telco, which was once PLDT, Inc.’s biggest rival in the industry, has expressed its interest to participate in the government’s search for the so-called “third telco player.”

In March, PT&T signed an agreement with state-owned National Transmission Corp. (TransCo) to allow for the use of the government’s national fiber optic backbone facility.

HOUSE of Investments Inc. (HI) has authorized capital stock of 3.75 billion shares consisting of 1.25 billion common share with par value of P1.50 per share, and 2.5 billion preferred shares with par value of P0.40 per share.

In its latest general information sheet (GIS), which it filed after its annual stockholders’ meeting on July 20, 2018, HI reported having 438 stockholders who subscribed to and paid for 1.191 billion shares.

The paid-up and subscribed capital, according to the same GIS posted on the website of the Philippine Stock Exchange (PSE), was equivalent to P1.171 billion.

Of the Filipino investor subscribers, 379 paid for 572.788 million common shares or 92.986 percent. In the same posting, 48 Filipinos were reported to have subscribed and paid for 618.535 million preferred shares which represent HI’s entire preferred shares.

Of HI’s 1.191 billion paid-up shares, 11 foreigners subscribed and paid for 43.209 million common shares or P64.813 million computed at par value of P1.50 per share.

In the same GIS, House of Investments said as of cut-off date, it had 300,000 treasury shares which it classified as all common.

At the stock’s market price of P6.19 per common share, the company’s treasury shares had market value of P1.857 million.

House of Investments is the holding company of the Yuchengo family who also owns Pan Malayan Management & Investment Corp., HI’s biggest stockholder.

As of Aug. 15, 2018, Pan Malayan owned 294.76 million HI common shares or 47.85 percent.

PCD Nominee Corp. held for Filipinos 231.596 million HI common shares or 37.60 percent and for foreigners, 41.947 million HI common shares or 6.81 percent, respectively.

In addition to Pan Malayan’s holdings for the Yuchengco group, A.T. Yuchengco Inc. held 10.597 million HI common shares or 1.14 percent while Malayan Securities held 2.79 million HI common shares or 0.45 percent.

PT&T’s stockholders

Philippine Telegraph and Telephone Corp. (PT&T) has authorized capital stock of 1.73 billion shares divided into 1.5 billion common shares with par value of P1 per share and 230 million preferred shares with par value of P10 per share.

Of PT&T’s authorized capital stock, 1.491 billion common shares or 99.37 percent were subscribed and paid-up by 3,593 Filipino stockholders, according to the company’s GIS.

It had 31 foreign stockholders who held 9.473 million PT&T common shares or 0.63 percent.

PT&T listed in its GIS Menlo Capital Corp. as its largest stockholder with 560 million common shares or 37.33 percent. The others were Telectronics Systems Inc., 300 million common shares or 20 percent; Republic Telecommunications Holdings Inc., 278.874 million common shares or 18.59 percent.

As holder for beneficial stockholders, PCD Nominee held 149.922 million PT&T common shares or 9.99 percent for Filipinos and 7.485 million PT&T common shares,\ for non-Filipinos.

In a public ownership report (POR), PT&T listed two principal stockholders such as Menlo Capital and Republic Telecommunications with 560 million PT&T common shares or 37.33 percent, and 278.874 million PT&T common shares or 18.59 percent.

The two stockholders’ holdings totalling 838.874 million PT&T common shares were equivalent to 55.92 percent.

As a result, PT&T’s public stockholders held 239.803 million common shares, or 15.98 percent.

Due Diligencer’s take

Of PT&T’s 1.5 billion outstanding common shares, only 800 million common shares are listed.

Of the company’s outstanding common shares, it said its free-float level was equivalent to 15.98 percent which was what PT&T reported in its POR.

Apparently, PT&T is not satisfied with its present authorized capital stock that it said in an information statement that it would seek the approval by its stockholders the increase in its authorized capital stock to 15.6 billion shares from 1.73 billion shares.

As planned by management, PT&T would issue out of the capital expansion three million additional common shares at P1 per share; 6.75 billion Series ‘A’ Serial Cumulative Convertible Redeemable Preferred shares at P1 per share; 1.8 billion Series B serial cumulative preferred shares at P1 per share; and 250 million Series ‘C’ Serial Cumulative Convertible Redeemable Preferred shares at P1 per share.

This means, by issuing all these shares, PT&T would be able to raise P9.1 billion.

In justifying the capital increase and issuance of additional shares, PT&T said this would “enable the company to pay its outstanding obligations through equity restructuring to raise funds in the form of equity offering with a view of using the proceeds of such funds to fund growth and expansion, general corporate purposes and/or for such other purposes to be determined by the board.”

If trading on PT&T’s common shares remains suspended, how can the company possibly engage in P9.1-billion capital-raising exercise? Just asking.

THE SUPREME COURT (SC) has reversed the appellate court’s decision to junk Philippine Telegraph and Telephone Corp.’s (PT&T) rehabilitation plan, the telecommunications company said on Monday.

In a disclosure to the stock exchange on Monday, PT&T said the High Court on July 11, 2018 issued a resolution that granted the company’s motion for reconsideration and reinstated its appeal against the May 2017 Court of Appeals (CA) decision that stopped its rehabilitation plan.

“Given the circumstances, this is a favorable decision for PT&T,” the company’s legal counsel Kenneth Joey H. Maceren said.

The Court of Appeals last year dismissed PT&T’s petition for rehabilitation, siding with a group of creditors.

Earlier this month, PT&T said the regional trial court (RTC) of Makati City, which acted as its rehabilitation court, has allowed the company to exit its court-assisted corporate rehabilitation on Aug. 6 “subject to compliance with certain requirements in line with the approved Rehabilitation Plan.”

PT&T chief operations officer Miguel Marco A. Bitanga told BusinessWorld in a text message on Monday that the company’s priority is still to leave rehabilitation.

“We just have to make sure we do whatever is necessary to exit rehab, and addressing both the rehab case with the RTC and the appeal with the SC would help ensure this objective is met,” he said.

Mr. Bitanga earlier said leaving rehabilitation would let the company raise additional capital in the stock market to finance its plans for expansion.

PT&T is vying to participate in the government’s bid for a so-called “third telco” player. PT&T Chief Executive Officer James G. Velasquez said earlier this month that leaving rehabilitation is “another proof” of its commitment to this endeavor.

THE Philippine Telegraph and Telephone Corp. (PT&T) is hopeful it can secure a foreign investor to boost its bid for the third telecommunications player slot.

PT&T chief executive officer James G. Velasquez said the company is now in advanced discussions with potential foreign partners.

“My view is the foreign partner will come in once the new major player is announced. A lot of them are waiting in the wings, and whoever wins, they’d partner with that company. But we’re already talking to some of them,” he told reporters last Thursday.

He noted the capital expenditure required to participate in the third telco auction will “not necessarily” come from a foreign investor.

“There are many ways of funding capex (capital expenditure). Some of that could be converted to opex (operational expenditure) under a managed service agreement,” Mr. Velasquez said.

Under the government’s draft terms of reference (ToR) on the selection of a third telco player, a participating company’s combined capex and opex must be at least P40 billion and at most P130 billion.

Mr. Velasquez said the company is planning to re-list its shares on the Philippine Stock Exchange, as a way to raise funds.

“We went for voluntary suspension, but we’re planning re-list, because we’d like to have access to the capital markets as well,” he added.

PT&T is looking to exit its court-assisted rehabilitation to resume operations and raise additional capital for its expansion plans. Earlier this month, a Makati Regional Trial Court (RTC) granted its petition “subject to compliance with certain requirements in line with the approved rehabilitation plan.”

The Department of Information and Communications Technology (DICT) is eager to name the third telco player before the year ends, noting it has a direct order from President Rodrigo R. Duterte.

DICT Acting Secretary Eliseo M. Rio, Jr. told reporters on Thursday it would not accede to some companies’ demand for more time, if there are about three to four companies that are ready to bid.

“If there are companies ready to compete with Globe (Telecommunications, Inc.) and Smart (Communications, Inc.), why not go ahead? Why should we wait for others? Maybe those who did their homework are more serious than those who are coming in late,” he said.

As for PT&T, Mr. Velasquez said it has been preparing since early this year to participate in the government’s auction.

“We have been preparing to bid as early as maybe six months ago. I think we’re just waiting for all of these to move forward. We’re ready to submit our proposal,” he said.